Nashua company subject of SEC probe
NASHUA (AP) – Federal securities investigators have filed suit against several former and one current employee of a high-tech company, saying they falsified the company’s earning statements.
The U.S. Securities and Exchange Commission says it filed a civil fraud action in Massachusetts federal court against five one-time senior executives at Robotic Vision Systems.
The Nashua company designs, manufactures and sells vision systems for computers. At the time of alleged fraud, the company’s corporate offices were located in Canton, Mass.
Four of the five defendants already have agreed to settle the claims without admitting or denying guilt. The case involving William Baker, the former general manager of a Robotic Vision business unit, has not be resolved.
The SEC alleges the company overstated its revenue and income in two public filings with the commission in 2000.
An amended annual report, filed the following May, revealed the company inflated its fiscal 2000 revenues by 2.1 percent, or $4.7 million. At the same time, the company overstated its net income by 13.5 percent, or $1.4 million.
The commission attributes the misstatements to improper accounting practices at the company’s Acuity CiMatrix, or ACIM, division. According to investigators, ACIM was booking revenue from sales to distributors and customers that “deferred, conditioned or even negated their obligation to pay for the products.”
Distributors in those cases did not have to pay the division until they had sold the products to their own customers, and some were allowed to return the products without payment if they remained unsold.
The division reported approximately $4.7 million of revenue on those sales as soon as the products were shipped to the distributors and customers, the SEC claims.
According to the lawsuit, Baker told one distributor not to mention his right to return the product in the purchase order because “(when) you do that, we can’t book the order as revenue.”
Investigators say the company’s then-chief financial officer, Frank Edwards, and the ACIM division acting president, Curtis Howes, “knew or should have known” about the improper accounting methods by late July 2000.
The company’s corporate controller, Laurence Cohen, also knew about the methods before the company’s August 2000 SEC filing, which included the misleading data, the SEC says.
All three men have agreed to settle the complaints. Edwards agreed to the largest fine, $75,000. He is also barred for five years from serving as an officer or director of a private company.
Cohen will pay $40,000 and is also barred from those positions for five years.
Howes, who still works for the company, agreed to pay $25,000 and return a $15,000 performance bonus.
Mark Tatkow, who was the company’s senior vice president of sales at the time, agreed to pay $65,000 and return a $10,000 performance bonus.